Section 998 offers: making one that actually shifts costs

Section 998 is one of the few places in California civil practice where a formatting mistake costs real money. The statute is short, the form requirements are three, and two of the leading published cases are about an offer that failed on one of them rather than on the number.

The frame that helps: 998 does not settle your case and it is not meant to. It exists to make the other side pay for having been unreasonable, and everything in it is built around a single comparison the court runs after judgment. Draft toward that comparison.

The three form requirements

Written, the terms of the judgment, and a provision allowing acceptance by signature. The third is the one that voids offers.

CCP 998(b). Acceptance itself, whether written on the offer or on a separate document, has to be in writing and signed by counsel for the accepting party, or by the party if unrepresented.

In Mostafavi Law Group, APC v. Larry Rabineau, APC (2021) 61 Cal.App.5th 614 the offer omitted the acceptance provision, and the court held the judgment entered on it invalid. Finlan v. Chase (2021) 68 Cal.App.5th 934 reached the same place on the cost-shifting side. This is not a technicality the court will forgive because the intent was obvious.

What courts will forgive is layout. In Whatley-Miller v. Cooper (2013) 212 Cal.App.4th 1103 the offer and a separate acceptance document went out in the same envelope and that satisfied the statute. And under Berg v. Darden (2004) 120 Cal.App.4th 721 the offer need only be in writing and clearly identify itself as a section 998 offer; formal proof of service is not required.

Two clocks, and they are not the same clock

Ten days before trial is the latest you can serve. Thirty days after service is usually when it dies. Whichever comes first governs.

An offer may be served not less than 10 days prior to commencement of trial, or of an arbitration under CCP 1281 or 1295. CCP 998(b).

It is deemed withdrawn if not accepted before trial or arbitration commences, or within 30 days after it is made, whichever occurs first, and once withdrawn it cannot be given in evidence at trial. CCP 998(b)(2). Commencement is defined for you: the beginning of the opening statement, or if there is no opening statement, the administering of the oath to the first witness, or the introduction of any evidence. CCP 998(b)(3).

Work the two clocks together. An offer served more than 30 days before trial expires on its own after 30 days. An offer served inside 30 days of trial expires when trial commences. The consequence practitioners miss is at the front of the case, not the back: in Barba v. Perez (2008) 166 Cal.App.4th 444 the offer went out with the summons and complaint, and it had to be accepted within 30 days or it was gone.

What an unaccepted offer actually does

The two directions are not symmetrical, and the asymmetry is the whole reason defence offers bite harder.

Defendant's offer, plaintiff does not beat it. The plaintiff does not recover postoffer costs and pays the defendant's costs from the time of the offer. On top of that, the court or arbitrator may in its discretion require the plaintiff to pay a reasonable sum for the defendant's postoffer expert witness fees, for experts who are not regular employees of a party, actually incurred and reasonably necessary in preparation for or during trial. CCP 998(c)(1). Those costs come off the damages, and if they exceed the damages the net goes to the defendant and judgment is entered accordingly. CCP 998(e).

Plaintiff's offer, defendant does not beat it. The court may in its discretion require the defendant to pay a reasonable sum for the plaintiff's postoffer expert fees, in addition to the plaintiff's costs. CCP 998(d). There is no equivalent provision stripping the defendant of its own costs, because a defendant who lost was not going to recover costs anyway.

Read the two together and the practical point emerges. A defendant's 998 offer can turn a plaintiff's win into a net judgment against the plaintiff. A plaintiff's 998 offer adds expert fees to a loss the defendant already had. Both are worth making. They are not the same weapon.

Did they beat it? The comparison is not the verdict

Postoffer costs come out of the comparison. Preoffer costs go into it. That arithmetic decides cases that looked like ties.

CCP 998(c)(2)(A): in determining whether the plaintiff obtains a more favorable judgment, the court or arbitrator shall exclude the postoffer costs. What the statute does not say, and the cases supply, is the other half: preoffer costs are added to the damages before you compare.

In Shain v. City of Albany (1980) 106 Cal.App.3d 294 the verdict matched the offer exactly at $100,000, and the plaintiff had $1,204.71 in preoffer costs. Total $101,204.71, which beat the offer. Stallman v. Bell (1991) 235 Cal.App.3d 740 states the rule the same way: preoffer costs in, postoffer costs out.

Which is why round numbers are a drafting mistake. An offer at exactly the figure you think the case is worth loses the comparison to a few hundred dollars of filing fees and service costs the plaintiff already spent.

Where the plaintiff recovers nothing on a defence verdict, there is no comparison to run. Zero does not beat any offer, and 998(c)(1) is triggered.

Settling before trial does not necessarily avoid it

The 2025 answer to the most common question about 998, and it changed.

The argument ran like this: section 998 shifts costs when a party "fails to obtain a more favorable judgment or award," so if the case settles and no judgment is ever entered after trial, there is nothing to compare and no cost shifting.

In Madrigal v. Hyundai Motor America (2025) 17 Cal.5th 592, decided 20 March 2025, the Supreme Court held that settlement before trial does not necessarily avoid statutory postoffer cost shifting.

Two practical consequences. On the receiving end, a lapsed offer does not stop mattering the moment the parties start talking about settling. And on the making end, an offer that expires unaccepted is still worth having made even in a case you expect to settle, because it is leverage on the settlement number itself rather than only on a post-trial cost memo.

Related, and older: Mon Chong Loong Trading Corp. v. Superior Court (2013) 218 Cal.App.4th 87 holds that a plaintiff's voluntary dismissal, with or without prejudice, is a failure to obtain a more favorable judgment, which triggers the court's discretion to award the defendant's postoffer expert fees. Walking away is not neutral once an offer has been served.

Good faith, and the token offer problem

Nothing in the text requires good faith. The cases require it anyway, and a token offer is the fastest way to lose the fee award you were building.

Licudine v. Cedars-Sinai Medical Center (2019) 30 Cal.App.5th 918 states the test: an offer is valid only if it is realistically reasonable under the circumstances of the particular case, meaning it carries some reasonable prospect of acceptance. The reasoning is that the statutory stick only encourages settlement if the offeree could realistically have taken the offer, and applying it to an offer nobody could accept lets parties generate expert fee awards on purpose. Elrod v. Oregon Cummins Diesel, Inc. (1987) 195 Cal.App.3d 692 is the older foundation.

Covert v. FCA USA, LLC (2022) 73 Cal.App.5th 821 confirms the standard of review is abuse of discretion, and that the offeree carries the burden of showing the offer was not made in good faith once the offeror has shown a valid offer.

The timing trap inside the good faith rule. Licudine treats an offer made before the offeree had a reasonable opportunity to get the facts needed to evaluate it as potentially not in good faith. So the early offer that maximises your cost exposure window is the same offer most vulnerable to being set aside. Serve it after the other side has what it needs to price the case, and paper what they had.

More than one party on either side

Apportion, and do not make acceptance by one contingent on acceptance by all. One exception, and it is narrow.

The rule from Meissner v. Paulson (1989) 212 Cal.App.3d 785, and reaffirmed in Williams v. The Pep Boys Manny Moe & Jack of California (2018) 27 Cal.App.5th 225, is that an offer to multiple parties is valid only if it is expressly apportioned among them and is not conditioned on acceptance by all of them. An unallocated joint offer stops each offeree evaluating it independently, and makes it impossible to tell afterwards whether any one of them beat it.

Weinberg v. Safeco Ins. Co. of America (2003) 114 Cal.App.4th 1075 applied that to invalidate an unapportioned offer to multiple plaintiffs who did not share a single indivisible injury.

The exception is unity of interest. Santantonio v. Westinghouse Broadcasting Co. (1994) 25 Cal.App.4th 102 recognises that a joint offer is permissible where the parties share a single indivisible injury and face joint and several liability, because there is nothing to allocate. Read that narrowly. Burch v. Children's Hospital of Orange County Thrift Stores, Inc. (2003) 109 Cal.App.4th 537 invalidated an unapportioned offer to multiple defendants who could have been found individually but not jointly and severally liable.

Claiming it afterwards

Ordinary costs go on the memorandum of costs. Expert fees under 998 sit in a procedural gap the Judicial Council has never closed.

A prevailing party claiming costs serves and files a memorandum of costs within 15 days after the date of service of the notice of entry of judgment. California Rules of Court, rule 3.1700(a)(1).

Section 998 expert fees are less tidy. In Anthony v. City of Los Angeles (2008) 166 Cal.App.4th 1011 the court observed that the Judicial Council has not specified a procedure for expert fees comparable to the one it provides for attorney fees, and treated a motion filed within 60 days as timely.

The practical answer is to do both. Put the expert fees on the memorandum of costs inside the 15 days, and be ready to bring a motion. The discretionary nature of the award means a court will usually want a motion and a declaration establishing that the experts were not regular employees, that the fees were actually incurred, and that they were reasonably necessary. That is not a showing a cost memo makes.

Expect to have to prove it, and expect to be discounted. Departments often want real proof before awarding 998 expert fees, and cutting the request down is common. A summary figure invites a haircut. Invoices, the engagement terms, and a declaration tying each charge to preparation for or during trial do the work. Ask for the part you can document rather than the total you spent, and build the request expecting the court to test it line by line.

Whether it actually moves the case

The leverage lands on the client, not on opposing counsel. That is most of why a 998 changes settlement conversations.

Lawyers on both sides usually know an offer is coming and have already priced it in. Clients have not. A served 998 is the moment cost exposure stops being an abstraction in a status letter and becomes a number attached to a decision, and the client is the one who feels it. That is generally where the movement comes from, more than from anything the offer does to counsel's analysis.

Which suggests how to write the covering explanation. The figure in the offer is doing less work than the sentence explaining what happens if it is not accepted.

It is not an end all be all. Plenty of offers lapse and nothing changes. And timing matters more than the amount. An offer served before the other side can price the case is weak leverage and vulnerable to the good faith attack above. One served after the depositions and the expert designations reaches a client who finally understands the exposure, which is a different conversation entirely.

Where section 998 does not reach

CCP 998(g) takes two things out entirely: an offer made by a plaintiff in an eminent domain action, and any enforcement action brought in the name of the people of California by the Attorney General, the Insurance Commissioner, a district attorney, or a city attorney acting as a public prosecutor. Note the asymmetry in the first one. It is the plaintiff's offer that is excluded.

Separately, the expert fee provisions in 998(c)(1) and 998(d) apply "in any action or proceeding other than an eminent domain action," so eminent domain sits outside this statute from both directions.

The statute draws no distinction between limited and unlimited civil cases. In a limited civil case the arithmetic matters more, not less, because expert fees and a cost shift can exceed the amount in controversy.

If one habit comes out of this page, make it the drafting one. Keep a single validated 998 template, with the acceptance provision in it, and start from that file every time rather than editing the last offer you sent. Both of the leading invalid-offer cases are about an offer that went out of an office where somebody copied the wrong document.